The Financial Conduct Authority (FCA) has today warned that home and motor insurers must improve their treatment of vulnerable customers and how they handle customers’ claims.
The financial services watchdog conducted a review following an increase in complaints about insurance claims which unearthed examples of lengthy complaints handling times and insurance customers not being given appropriate settlements. It also found cases of motor insurance customers being offered a price lower than their vehicle’s fair market value after being written off.
The regulator noted that relevant firms have been instructed to right these wrongs and provide redress where necessary to impacted consumers. Its review also found that some firms could not evidence that they were monitoring customer outcomes well enough, and said better information sharing is required where insurers are dealing with intermediaries to settle claims.
In addition, some organisations have failed to show they are adequately able to identify vulnerable customers.
The FCA said it is taking action against firms who have broken its rules. It advised customers to complain to their insurance company if their claims have been delayed or if they’re not happy with how their claims are being handled. If they are not satisfied with a firm’s response, customers are advised that they can also raise a complaint with the Financial Ombudsman Service.
The FCA also highlighted several examples of good practice revealed by its recent review, including:
• Firms providing greater forbearance – waiving fees or excesses, offering payment holidays and setting up customer support hubs
• Dedicated website sections to help support vulnerable customers – both financial and non-financial
• The use of voice analytics and specialist training to help identify vulnerable customers.
Commenting on the findings of the review, Sheldon Mills, executive director, consumers and competition at the FCA, said: “Timely and fair claims handling is especially vital during the cost of living squeeze.
“While we have seen many firms treating their customers correctly, we found too many examples of customers not receiving the service they’re entitled to. Where we found issues, we’ve told firms to put them right. We’ll be monitoring them to ensure they do.”
Alongside the review, the FCA has finalised new guidance for how insurance firms should support their customers, offering further insight into how they respond if they identify customers who are in financial difficulty.
The regulator has also consulted on strengthening protections for borrowers in financial difficulty (including for premium finance). The FCA highlighted that its actions are part of its strategy to deliver good outcomes for consumers and its push to see higher standards across the UK’s financial services sector.
